October 4, 2019 / 4:33 PM / 13 days ago

Breakingviews - Review: Bob Iger’s magic touch

NEW YORK (Reuters Breakingviews) - Bob Iger has been underestimated at almost every turn in his career. From a lowly ABC studio supervisor assigned to soaps like “All My Children” to the corner office at Walt Disney, the executive’s amiable demeanor belies a killer instinct that allowed him to assemble a portfolio of assets that is the envy of the media world. His timing may be just as good. Iger is preparing to leave the $230 billion company just as the industry undergoes another wrenching transition.

Disney's Chief Executive Officer Bob Iger holds a news conference at Shanghai Disney Resort as part of the three-day Grand Opening events in Shanghai, China, June 15, 2016. REUTERS/Aly Song

“The Ride of a Lifetime” sums up the lessons Iger learned as Disney’s sixth boss. It’s a surprisingly nimble read with a golden takeaway: treat others with respect. This may seem obvious, but the path to the executive suite is blocked by schemers, backstabbers and fearmongers. Early in his career, Iger recalls, his manager told him he was “unpromotable.” The label was not only wildly off, it helped propel him up the corporate ladder.

Diplomacy proved vital to navigating the many unstable situations Iger confronted during his 45 years at the company. In 1985 ABC was sold to Capital Cities, a company a quarter its size, for $3.5 billion. The slick broadcaster viewed new owners Tom Murphy and Dan Burke as out-of-their-depth rubes more accustomed to running local TV stations than one of America’s biggest networks. Iger though was struck by the duo’s no-nonsense work ethic and belief in their employees. Their management style served as one of his lodestars.

Another megadeal, this time Disney’s $20 billion acquisition of Capital Cities/ABC in 1996, nearly threw Iger off course. Michael Eisner, the entertainment group’s CEO, was not fully aware of the complexities of the broadcast business, such as negotiating with the National Football League to air games on the ABC network as well as the ESPN cable channel. Iger proved a useful guide and was well placed to advance as his boss fought multiple battles.

Eisner made an expensive mistake in hiring super-agent Michael Ovitz as his heir apparent. Family shareholder Roy Disney launched a proxy war while Steve Jobs, who owned the Pixar animation studio, grew exasperated with the Disney partnership. The company’s stock swooned, prompting Comcast’s Brian Roberts to swoop in with an offer to swallow up the Mouse House. To make matters worse, the cable giant’s president was Steve Burke, the son of Iger’s mentor.

Though the Comcast takeover failed, Eisner was forced to step aside as chairman and eventually CEO. An exhausted board started the search for the next leader. As president and chief operating officer, Iger was in the running but there was nothing easy about the process. Directors grilled him in 15 different interviews. As soon as he clinched the top job, shareholders Roy Disney and Stanley Gold sued the board.

Undeterred, Iger smoothed over the situation. Roy Disney felt alienated from the media conglomerate that bears his family’s name. In exchange for dropping the lawsuit, Iger gave him an emeritus role on the board and an office on the studio’s lot. The second task was to mend fences with Jobs. Iger not only convinced the mercurial Apple boss to reconsider Disney but persuaded him to sell Pixar for $7.4 billion. The relationship with Jobs is one of the things he’s “most grateful for and surprised by,” Iger writes. In one telling anecdote, he explains how Jobs voted against four fellow Disney directors because he felt they were a “waste of space.”

Iger’s finesse allowed him to court other power players. He charmed Ike Perlmutter, George Lucas and Rupert Murdoch into selling Marvel, Lucasfilm and most of Twenty-First Century Fox, respectively. Just as important, though, Iger understood when to walk away from a deal. He backed out of buying Twitter because he feared the social network would corrode Disney’s brand.

The book has one obvious omission. Not once does it mention Reed Hastings’ Netflix, one of the main catalysts for changing the way people watch TV and movies. The streaming giant’s success was one of the reasons Murdoch parted with much of his Fox empire. The media mogul believed the Magic Kingdom was well-placed to manage the shift to on-demand entertainment, largely because of a library which ranges from Star Wars to the Simpsons to the Avengers, as well as a brand which is recognized around the globe.

Murdoch wanted an assurance from Iger that he would stick around. The Disney boss acknowledges he explored a bid for the U.S. presidency before deciding against it. Still, Iger insists his last contract extension, to December 2021, was his last. “I’m comforted by something I’ve come to believe more and more in recent years,” he writes. “It’s not always good for one person to have too much power for too long.”

The timing could be perfect. Disney’s stock recently hit an all-time high. Overseeing its next phase will be a difficult challenge. Netflix has a lead of more than a decade. If Iger is true to his word, it will be someone else’s ride.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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